Nintendo is competing against two competitors with impossibly deep pockets: Sony and Microsoft. They can't do a loss leading razer-and-blades sales model where

Nintendo is competing against two competitors with impossibly deep pockets: Sony and Microsoft. They can't do a loss leading razer-and-blades sales model where they lose on the system but make it up on games. Thus every system they sell since the entry of both competitors has to be both profitable and price competitive.